Importers close door on overseas online stores by Rachel Wells.

The Gerry Harvey-esque arguments about how GST makes local retailers uncompetitive get a run again but, as previously noted, Prof. Gans is not convinced by that (in the context of digital downloads).

This announcement seems like particularly good timing given Senator Conroy’s plans to have somebody inquire into something.

Maybe this is not exclusive dealing in contravention of s 47 of the Competition and Consumer Act 2010 because does not have the purpose, and it is not likely to have the effect, of substantially lessening competition, but:

(a) I hope they talked to the lawyers before they started making what might be thought of as “admissions”; and

(b) the record companies didn’t get away with the argument.

I guess we can look forward to some further instalments in this story.

Share on Facebook

Reports here and here.

According to that second report, someone trailed a coat on the issue last week when ACCC Commissioner Ed Willett appeared before the Joint Committee on the National Broadband Network.

Now, as a purchaser of digital files, I am hardly unbiased but it does seem hard to justify price differentials of 50% or more. Seems like there is economic reasoning that challenges the Gerry Harvey-esque explanations.

Only problem, almost 20 years ago, the Prices Surveillance Authority recommended (what became in effect) this provision and some record companies got into big trouble trying to circumvent their own corresponding provision, but it would seem nothing has changed. Gartner analyst, Brian Prentice, reported here might be on to something suggesting the problem is the territorial nature of copyright itself. A (copyright) world without borders. Imagine!

Share on Facebook

The only issue before the High Court was whether or not iiNet (the ISP) was liable for authorising the infringements of copyright committed by 11 of its subscribers, who made available online various infringing copies of films through BitTorrent (even though it can be used for lawful purposes, I think I’ll let you go find your own copy if you’re so inclined). Given that iiNet had no role in BitTorrent, its subscribers’ choices to use BitTorrent or what they downloaded with BitTorrent, the film companies sought to put iiNet’s liability on the basis that (at [5]):

• the provision by iiNet to its customers (and to other users of those customers’ accounts) of access to the internet, which can be used generally and, in particular, to access the BitTorrent system;
• the infringement of the copyright in the appellants’ films by customers of iiNet who have made the films available online in whole or in part using the BitTorrent system;
• the knowledge by iiNet of specific infringements, as drawn to its attention by notices from the Australian Federation Against Copyright Theft (“AFACT”), representing the appellants;
• the technical and contractual power of iiNet to terminate the provision of its services to customers infringing copyright; and
• the failure by iiNet to take reasonable steps to warn identified infringing customers to cease their infringements and, if appropriate, to terminate the provision of its services to them. [1]

As you no doubt know by now, the High Court ruled unanimously that iiNet did not auhorise the infringements of the film companies’ copyrights.

The first thing to note is we’ve got those 2 teams giving separate judgments again: (French CJ, Crennan and Kiefel JJ; Gummow and Hayne JJ). Not quite sure where that is going although 2 members of team 1 will still be there after June 2013.

Next, all 5 judges agreed whether someone is liable for authorising is largely a question of fact to be determined in all the circumstances.

Then, despite what we had all thought since Moorhouse, all 5 judges agree that “authorise” does not mean “sanction, approve, countenance”. “Countenance” in particular includes connotations which ‘are remote from the reality of authorisation which the statute contemplates’ (at [68]) and go well beyond the ’core notion of “authorise”’ (at [125]).

Instead, in deciding whether or not there has been an authorisation all 5 judges directed attention to the 3 criteria specified in 101(1A) and 36(1A):

(a) the extent (if any) of the person’s power to prevent the doing of the act concerned;

(b) the nature of any relationship existing between the person and the person who did the act concerned;

(c) whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

All 5 judges recognise that the 3 s 101(1A) criteria are not exhaustive; they are the starting point (at [68]) and essential (at [135]), however, in this case at least they are the only criteria considered.

In applying these 3 factors, the 2 judgments reach pretty much the same conclusions:

(78) The extent of iiNet’s power was limited to an indirect power to prevent a customer’s primary infringement of the appellants’ films by terminating the contractual relationship between them. The information contained in the AFACT notices, as and when they were served, did not provide iiNet with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers’ accounts. For these reasons, iiNet’s inactivity after receipt of the AFACT notices did not give rise to an inference of authorisation (by “countenancing” or otherwise) of any act of primary infringement by its customers.

(146) The present case is not one where the conduct of the respondent’s business was such that the primary infringements utilising BitTorrent were “bound” to happen in the sense apparent in Evans v E Hulton & Co Ltd[165], and discussed earlier in these reasons[166]. Further, iiNet only in an attenuated sense had power to “control” the primary infringements utilising BitTorrent. It was not unreasonable for iiNet to take the view that it need not act upon the incomplete allegations of primary infringements in the AFACT Notices without further investigation which it should not be required itself to undertake, at its peril of committing secondary infringement.

These conclusions, however, summarise the results of a very multi-faceted and many layered inquiry. Any “power” that iiNet had was too “indirect” or “attenuated” essentially because:

• iiNet had no involvement in BitTorrent or a user’s choice to use BitTorrent or what the user used BitTorrent for;
• unlike Grokster (pdf) and Kazaa, iiNet did not encourage its users to use BitTorrent or seek to profit specifically from their infringing use;
• iiNet did have a contractual power to suspend or terminate an account for breach (including for copyright infringement) but:
  • its obligation was to provide internet access which could be used for non-infringing or infringing purposes, not just infringing purposes;
  • terminating an account would not stop the user just using a different account, possibly with a different ISP;
  • iiNet would be liable for breach of contract if it suspended or terminated a user in response to an allegation and it turned out the user was not in fact infringing copyright. [2]

A third consideration highlighted in both judgments was the inadequate notice of infringements given through the AFACT notices. Remember, in keeping with Gibbs J, [3] the film companies argued that iiNet had knowledge that its requirement that users not infringe copyright was being ignored.

It was accepted that iiNet knew that more than half of its user’s usage involved BitTorrent (although not all of that constituted infringements). (at [38], [92]; but iiNet was no different to any other ISP in that regard).

The film companies also sent iiNet on a weekly basis AFACT notices which purported to set out information about subscriber’s accounts that were being used to communicate infringing copies. By the trial, iiNet accepted that these AFACT notices did in fact identify infringements. There were, however, a number of problems.

Most importantly, when the notices were sent, there was no explanation of how they were prepared or how they worked (not that that would have made any difference to how iiNet would have treated them) [4]; it was only after discovery and provision of expert evidence that iiNet could understand them sufficiently to accept their veracity ([34] and [75], [138]).

This raises the question: what is iiNet’s situation now that it has had explained to it and accepted as reliable the AFACT notices? That seems rather less clear.

The ‘reasonableness’ of iiNet’s inaction was at least in part predicated on its lack of knowledge given the problems with the AFACT notices.

First, French CJ, Crennan and Kiefel JJ say at [69], however,  that there cannot be liability for authorisation without power to prevent the primary infringement and, as already noted, any such power is lacking or too indirect. Gummow and Hayne JJ do not make so explicit a statement (and their Honours endorse imposition of liability where infringement is “bound” to happen). Nonetheless, their Honours do at several points emphasise the presence or absence of control, or direct power to control, the primary infringement as key facts. For example, [127] and in contrast to Moorhouse at [144] from which iiNet’s situation was “well removed”.

Secondly, the High Court seemed very reluctant to leave iiNet with the burden of having to check back to see whether a particular user was still infringing particularly in circumstances where it would have been dependent on the use of the film companies’ technology to do so. So French CJ, Crennan and Kiefel JJ said:

(74) Whatever responses iiNet received to warnings, iiNet would be obliged to update the investigative exercise underlying the AFACT notices either itself or by reference to subsequent AFACT notices (allowing an appropriate interval for compliance with a request to cease infringement) before proceeding further.

(75) Updating the investigative exercise in the AFACT notices would require iiNet to understand and apply DtecNet’s methodology – which, among other things, involved a permission to DtecNet from AFACT to use the BitTorrent system to download the appellants’ films. Before the filing of experts’ reports in the proceedings, the information in the AFACT notices did not approximate the evidence which would be expected to be filed in civil proceedings in which interlocutory relief was sought by a copyright owner in respect of an allegation of copyright infringement. Also, any wrongful termination of a customer’s account could expose iiNet to risk of liability. These considerations highlight the danger to an ISP, which is neither a copyright owner nor a licensee, which terminates (or threatens to terminate) a customer’s internet service in the absence of any industry protocol binding on all ISPs, or any, even interim, curial assessment of relevant matters.[5]

Thirdly, both judgments refer with approval to the Blank Tapes case and the majority’s recognition there that manufacturers of products such as blank tapes and video recorders, which have both lawful and unlawful uses, will not be liable for authorising copyright infringement even if they know it is likely that their products will be used to commit infringements (at [53] and [130]).

Both judgments conclude with calls for the legislature and/or co-operative industry codes to deal with the challenges these issues pose. It had seemed that a co-operative industry code required the near death experience in the Full Federal Court for motivation, but at least the 5 major ISPs kept plugging away.

Finally, what is the status of Moorhouse itself? Here the difference with Amstrad and CCH Canadian comes clearest. The House of Lords plainly thought Moorhouse was a copyright liability too far and, as the Roadshow High Court interpreted the judgment, limited authorisation to cases where the defendant granted, or purported to grant, the primary infringer the right to do the infringing act. The Supreme Court of Canada went even further and held that a law library was not liable for authorising infringements by photocopying in largely similar circumstances to Moorhouse (if one can overlook any difference between a reference library for lawyers and a university library). In contrast, the Roadshow High Court explained that the University was liable in Moorhouse because of the extent of its control over the photocopier, the books and the primary infringer’s activities: the circumstances in Roadshow were “well removed” from those in which liability was imposed on the University (at [144], see also [69]). This approach may reflect the legislative codification of criteria from Gibbs J’s judgment, but it also reflects the way iiNet put its case (at [60] – [61]).

Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16

Share on Facebook

While initially there were some indications that this review might relate to intellectual property issues, especially copyright, the Final Report focuses on the areas of regulation traditionally covered by labels like “broadcasting”, telecommunications, “spectrum allocation”, “media ownership” and “local content” requirements.

The Minister’s Press Release notes that:

The release of the report provides an opportunity for stakeholders to engage with the Committee’s recommendations. I expect the recommendations will generate robust public debate

and indicates the Government will respond in due course

Links to various preliminary documents and Word version of Final Report.

Lid dip: Copyright Council

Share on Facebook

Based on the summary, the Full Court has found that Optus either made the copies of the broadcast and films or Optus and the subscriber did so jointly.

As Optus was the (or a) maker, it could not rely on the “home taping” defence provided s 111 as the copy was hardly for “private and domestic use”.

This is, of course, the opposite result to that reached by the Second Circuit in the US in the Cartoon Network case in different legislative setting.

The second point would seem to follow necessarily from the first, but the first could render the protection of s 22(6) largely nugatory to those who carry transmissions of infringing material across their networks. The reasoning on this point will need closer consideration. Of course, Optus was storing the copy longer than may be the case of an ISP whose network is used to download some infringing material. Wonder what this provision means?

National Rugby League Investments Pty Limited v Singtel Optus Pty Ltd [2012] FCAFC 59

Lid dip Australian Copyright Council

Share on Facebook

On a first look, there are some references suggesting that our law is being brought back in line with the UK (CBS v Amstrad) and Canada (CCH Canada v Law Society of Upper Canada). Consideration will have to await further review.

Although unanimous, there are 2 judgments: as in iceTV, French CJ, Crennan and Kiefel JJ in one and Gummow and Hayne JJ in the second.

Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16

Share on Facebook

According to IP Australia, most of the amendments will not come into force until 15 April 2013, but the exceptions to patent infringement for (1) regulatory use or (2) experimental use are now in force.

Many of the changes yet to come into force do relate to patents. There are, however, important changes to trade mark registrability (amongst other things) and conferral of original jurisdiction (from 15 April 2013) on the Federal Magistrates Court in matters concerning registered designs, trade marks or PBR , including appeals from the Registrar, infringement and revocation proceedings.

The Act (AUSTLII doesn’t have a link at the time or writing).

IP Australia’s announcement. Links to some previous commentary here.

Share on Facebook

The ACCC has successfully appealed the Google Adwords case for misleading and deceptive conduct.

So, for example, Alpha Dog Trainging has been operating a dogtraining business for 12 years. Dog Training Australia (Ausdog) bought ads on the keywords Alpha Dog Training through Google’s Adwords program. One ad generated was:

Alpha Dog Training 

DogTrainingAustralia.com.au All Breeds. We come to you. No dog that can’t be trained. 

Instead of being taken through through to Alpha Dog Training’s website, however, a user who clicked on the ad was taken through to Ausdog’s website.

A clear case of misleading or deceptive conduct by Ausdog.

Because of its role in “selecting” which ads got placed in what order, Google has also been found liable.

Prof. King, formerly an ACCC commissioner, highlights why and thinks the Court got it seriously wrong.

Did we just kill the Internet in Australia?

ACCC v Google Inc. [2012] FCAFC 49 (Keane CJ, Jacobson and Lander JJ)

Share on Facebook

Acohs and Ucorp both provide in competition with each other Material Safety Data Sheets (MSDSs) which are required by law to identify the properties, uses and hazards of dangerous chemicals.

At first instance, Jessup J found Acohs owned copyright in the MSDSs which had been written by its employees, but not by employees of third parties. His Honour also held that copyright did not subsist in the HTML source code of the MSDSs in its collection: the employees who prepared the software to generate the source code were not collaborating with those who subsequently entered the data in the sense necessary to constitute a work of joint authorship.

The Full Court has upheld these conclusions.

Jessup J also held that Ucorp could claim the benefit of an implied licence which permitted it to reproduce the MSDSs in which Acohs held copyright.

Acohs did not challenge the existence of an implied licence on appeal (after all, it has the benefit of a similar implied licence arising from the earlier litigation against Bashford). There was, however, an important difference in this case.

Ucorp copied several thousand MSDSs each week. At least some of these were made in response to requests from customers who had the benefit of an implied licence from Acohs. The copies made by Ucorp in response to such requests were protected by the implied licence.

However, Ucorp also “trawled” the internet looking for any other MSDSs and, when it found ones it did not already have stored, it downloaded them so as to have them available if a customer came along with a request for one. As these were not made in response to a request, but rather in anticipation of a request (which might never be made), they fell outside the scope of the implied licence. The Full Court reasoned that the licence that would be implied could be the bare minimum necessary and it was only necessary that a licence be implied in favour of customers who placed a request with Ucorp for a copy. The “trawling” could not be sanctioned.

Thus, Ucorp will be found liable for infringing the copyright in all those MSDSs which it reproduced without a specific request from a customer before the copy was made.

Two additional points:

First, Bennett J has adopted a similarly strict approach to the scope of the “interoperability” defence for infringement of copyright in computer programs. ISI made software that enabled users of CA’s Datacom database system to convert to IBM’s DB2 system. Section 47D protects reproductions made (for the relevant interoperability purpose) by the owner or licensee of copyright in a computer program or someone acting on their behalf. Bennett J found that ISI was not acting “on behalf” of such licensees when it made reproductions of “macros” used in the Datacom system for its commercial 2BDDB2 program as they were not made in response to specific requests from customers before the reproduction was made: CA Inc v ISI (starts around [334]).

Secondly, the Full Court does not appear to have been too happy with the licence Merkel J implied in the original Acohs v RA Bashford litigation at [108]:

The apparent acceptance by the parties of the correctness of Bashford has important ramifications for this appeal. As the parties conducted both the trial before the primary judge and the present appeal on that basis, the occasion does not arise for us to proceed otherwise than in accordance with, and to the extent of, that acceptance. In so proceeding, we do not wish to be taken as endorsing the correctness of all aspects of that decision.

Perhaps, the new reference to the ALRC cannot come soon enough.

Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16

Share on Facebook

Section 109 of the Copyright Act 1968 provides a compulsory licence for the broadcasting to the public of sound recordings. Section 152, however, caps the royalty payable to record companies by broadcasters at 1% of the gross earnings of the broadcaster.

No such limitation had applied to the “corresponding” copyright in sound recordings under the 1911 Act.

The 1911 Act was repealed when the 1968 Act came into force on 1 July 1969. Section 220 of the 1968 Act provided that sound recordings in which copyright subsisted immediately before 1 July 1969 qualified for copyright under the 1969 Act effectively as provided for under the 1968 Act.

The record companies argued that the imposition of the 1% cap was an acquisition of their property in sound recordings made before July 1969 otherwise than on just terms in contravention of s 51(xxxi) of the Constitution.

The High Court has unanimously rejected that claim.

French CJ, Gummow, Hayne and Bell J said the record companies’ argument was predicated on a wrong assumption. They no longer owned copyright under the 1911 Act which had been qualified. Rather that copyright had been terminated and replaced with a new and different copyright under the 1968 Act. So at [10] and [11]:

[10] The assumption by the plaintiffs is that the copyright presently enjoyed in respect of the pre?1969 recordings, and which will expire in accordance with the extended term fixed by the operation of the Free Trade Act upon the 1968 Act, is that which arose under the 1911 Act and was carried forward by the 1968 Act, but with the impermissible imposition upon those copyrights of the “cap” in the compulsory licensing system introduced by the 1968 Act. The Commonwealth denies that assumption. The Commonwealth submission, which should be accepted, is that upon the proper construction of the 1968 Act: (a) copyrights subsisting in Australia on 1 May 1969 under the Imperial system were terminated; (b) thereafter, no copyright subsisted otherwise than by virtue of the 1968 Act; and (c) to that copyright in respect of sound recordings there attached immediately the compulsory licensing system including the “cap” upon the royalties payable thereunder.

[11] It should be emphasised that the plaintiffs do not assert that the 1968 Act is invalid by reason of its bringing to an end the operation in Australia of the Imperial system without the provision of just terms. To do so successfully would be to leave them with such rights in respect of the pre?1969 recordings as they had under the 1911 Act and the 1912 Act, and without any copyrights subsisting under the 1968 Act. Rather, the plaintiffs seek to attack the validity of the attachment to their rights under the 1968 Act of one aspect of the compulsory licensing system for sound recordings. For the reasons which follow, that attack must fail.

Heydon J to similar effect at [63]:

In short, the 1968 Act did not preserve the second to sixth plaintiffs’ rights under the 1911 Act and the 1912 Act. It abolished those rights. It substituted for them distinct and fresh rights – some more advantageous to those plaintiffs, some less. Thus ss 109 and 152 did not cause any property to be acquired. Property may have been extinguished by other provisions, but the plaintiffs’ case was not concerned with them.

After considering the application of s 51(xxxi) of the Constitution to statutory intellectual property rights generally, Crennan and Kiefel JJ reached the same conclusion at [129], pointing out at [130] that the record companies could not accept s 220 of the Copyright Act as valid and at the same time contend that ss 109 and 152 were invalid.

[129] When ss 8, 31, 85, 89(1), 207 and 220(1) of the 1968 Act are read together, it is clear that the copyright of the relevant plaintiffs under the 1911 Act, which included the exclusive right to perform the record in public, is not continued under the 1968 Act; rather it is replaced. Whilst it is true that, as the plaintiffs submit, certain records in which copyright subsisted under the 1911 Act are brought within the scheme of the 1968 Act, that is achieved by the re enactment, in substance, of qualifying provisions in the 1911 Act in, and for the purposes of, the 1968 Act. The effect is that the plaintiffs’ entitlement to sue for infringements under s 101 of the 1968 Act in respect of sound recordings in which copyright subsists pursuant to s 89(1) is an entitlement to sue in respect of infringements of the copyright in sound recordings contained in s 85, which replaces the copyright in records under s 19(1) of the 1911 Act. Inasmuch as ss 109 and 152 operate to qualify a record manufacturer’s exclusive rights by providing an exception to infringement, it is the exclusive rights under s 85 which are affected, not the exclusive rights under the 1911 Act (which have been replaced).

[130] Whilst the plaintiffs mount no attack on the validity of provisions of the 1968 Act which effect the replacement of the relevant plaintiffs’ copyright under the 1911 Act with a copyright under the 1968 Act, their attack on the validity of ss 109 and 152, which depends on the continuing subsistence of copyright under s 19(1) of the 1911 Act, is untenable. If the plaintiffs were to attack the validity of the provisions of the 1968 Act which effect the replacement of copyright under s 19(1) of the 1911 Act with a differently constituted copyright under s 85 of the 1968 Act, they would risk being left not only with the awkwardly expressed copyright under s 19(1) of the 1911 Act in respect of records, but also with a copyright, the term of which was limited to 50, rather than 70, years.

Now the High Court have reminded themselves of all these matters, they will be primed for the tobacco companies challenge to the validity of the Tobacco Plain Packaging Act 2011, the hearings for which start in April.

Phonographic Performance Company of Australia Limited v Commonwealth of Australia [2012] HCA 8

Share on Facebook

Claim 1 of the Patent was:

A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

“(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

“(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,

“wherein the level of 6-thioguanine less than about 230 pmol per 8×108 red blood cells indicates a need to increase the amount of said drug subsequently admin istered to said subject and

“wherein the level of 6-thioguanine greater than about 400 pmol per 8×108 red blood cells indicates a need to decrease the amount of said drug subsequently ad ministered to said subject.”

The Supreme Court characterised that part of the claims dealing with the relationship between concentrations of certain metabolites in the blood with the effectiveness of particular dosages as a law of nature, which was unpatentable. The additional features did not overcome that exclusion as they were in effect already well-known and practised. In his Honour’s overview, Breyer J explained the rationale:

[The cases] warn us against up holding patents that claim processes that too broadly preempt the use of a natural law. Morse, supra, at 112– 120; Benson, supra, at 71–72. And they insist that a process that focuses upon the use of a natural law also contain other elements or a combination of elements, sometimes referred to as an “inventive concept,” sufficient to ensure that the patent in practice amounts to signifi cantly more than a patent upon the natural law itself. ….

We find that the process claims at issue here do not satisfy these conditions. In particular, the steps in the claimed processes (apart from the natural laws them selves) involve well-understood, routine, conventional activity previously engaged in by researchers in the field. At the same time, upholding the patents would risk dis proportionately tying up the use of the underlying nat- ural laws, inhibiting their use in the making of further discoveries.

Patently-O has a more substantive consideration: Natural Process + Known Elements = Normally No Patent. The Commissioner of Patents has issued new guidelines indicating his understanding here; and criticisms have been propounded here and here.

The Supreme Court subsequently remitted the Myriad “gene patent” case to the Federal Circuit and Patently-O thinks their patent is going down too.

Our law is in many respects rather different. Section 18(2) of the Patents Act contains an exclusion from patentability only for human beings and the processes for their generation. Under s 18(1) and (1A), however, a patentable invention must be a “manner of manufacture within the meaning of s 6 of the Statute of Monopolies”.

In the ‘watershed’ NRDC case, the High Court confirmed that a ‘mere’ discovery was not a manner of manufacture, but an application of a discovery in a field of economic endeavour would be. A ‘mere’ discovery being “some piece of abstract information without any suggestion of a practical application of it to a useful end” at [8].

On this approach, Prometheus’ patent appears to have moved beyond the ‘mere discovery’ stage. The question might be, therefore, whether the additional integers were obvious or, may be, we have moved into Microcell territory: nothing but “nothing but a claim for a new use of an old substance” (see NRDC at [7].

A role for that approach was preserved (reinstated?) under the 1990 Act by the High Court in Phillips v Mirabella. Now, given the overlap between the Mirabella court’s analysis and the statutory requirements for novelty and inventive step (or an innovative step), that raises a whole set of issues. First, there is a question whether Mirabella would be decided the same way given the High Court seemed to have cut the legs out from under it in Advanced Building Systems - although, as the Full Federal Court pointed out in BMS v Faulding, Advanced Buidling Systems was decided under the 1952 Act and distinguished Mirabella on the grounds that the 2 Acts were different.

In trying to make sense of that, the Full Court went on to find that the “lack of newness” must be apparent on the face of the specification. As that appears to depend on the text of the specification, the approach taken by the US Supreme Court might not be open: the Faulding court found the dosage type regime a manner of manufacture although, in the end, it failed the novelty test.

In Arrow v Merck, Gyles J struck down a dosage regime on the grounds that it lacked subject matter. On appeal, the Full Court upheld invalidity, but only on grounds of lack of novelty and inventive step. Subsequently, Gyles J also accepted that the lack of subject mater ground could not be made out if it was necessary to resort to extrinsic evidence.

I guess we’ll see where the Myriad litigation in Australia takes us in due course.

Mayo Collaborative Services v. Prometheus Labs., Inc. (Supreme Court 2012) (pdf)

Share on Facebook

Such matters are governed by s 83 of the Plant Breeder’s Rights Act.

Rights granted before the PBR Act commenced have a term of 20 years from acceptance (PBR Act s 82(2) and PVR Act s 32); in contrast, rights granted pursuant to applications filed after the PBR Act commenced have a term of 20 years from grant (except for trees which may have up to 25 years).

Patentology has a report.

Elders Rural Services Australia Limited v Registrar of Plant Breeder’s Rights [2012] FCAFC 14 allowing an appeal from

Elders Rural Services Australia Limited v Registrar of Plant Breeder’s Rights [2011] FCA 384

Share on Facebook

It is now expected to be passed by the House of Representatives in the “autumn” sittings.

Some earlier posts here, here, here and here. IP Australia’s summary. The EM.

Share on Facebook

The “tobacco plain packaging” legislation became law last December and, as you will recall, Philip Morris Asia has initiated an arbitration proceeding under the Australia-Hong Kong Investment Treaty.

Australia filed its “defence” late in December, alleging that Philip Morris Asia bought the assets in question after the Government’s plans were known and so hasn’t lost any value:

Prof. Davison has a typically wry report

Philip Morris’ complaint and Australia’s “defence” are available via here.

Share on Facebook

Sports Warehouse Inc. and Fry both sell tennis products online using trade marks based on TENNIS WAREHOUSE.

Sports Warehouse started first, in 1984 in California although in time its business expanded and in 1994 it went on line. Eventually, its sales expanded internationally including to Australia.

Fry had successfully opposed Sports Warehouse registering TENNIS WAREHOUSE.

Sports Warehouse successfully opposed Fry registering:

However, Dodds-Streeton J has now upheld Fry’s appeal.

The grounds of opposition included that the trade mark lacked capacity to distinguish, that it was confusingly similar to Sports Warehouse’s trade mark and also that the application was made in bad faith.

The s 62A ground was based on the fact that, before Fry adopted its trade mark, its principal, Mr Fry had done a Google search and come across Sports Warehouse’s website. He also used some photographs from Sports Warehouse’s website for his own site. However, he said that before he adopted the name his wife had done a trade mark search to confirm it was not an “international” trade mark. Further, he acknowledged at [21]:

there was potential that some people would confuse the websites (at least at the point of the domain name) and acknowledged that he chose the name partly for that reason, but denied that he hoped to use Sports Warehouse’s reputation in order to boost early sales.  He also denied that he believed the name TENNIS WAREHOUSE would cause customers aware of Sports Warehouse’s website to think that the Fry Consulting website was an arm or affiliate of Sports Warehouse.

• a person who monitors new property developments; registers the name of the new property development as a trade mark for a number of services; and then threatens the property developer with trade mark infringement unless they licence or buy the trade mark;
• a pattern of registering trade marks that are deliberate misspellings of other registered trade marks; and
• business people who identify a trade mark overseas which has no market penetration in Australia, and then register that trade mark with no intention to use it in the Australian market and for the express purpose of selling the mark to the overseas owner.

(The last example may be contrasted to the “sharp”, but previously legitimate, practice of registering such a mark and operating a business in Australia – see [20] here.)

The concept in s 62A, however, was not limited to those examples. Her Honour drew substantial guidance from a number of English cases (and consideration of those decisions in the Office) on s 3(6) of the Trade Marks Act 1994 (UK) which adopted a “combined test” involving both subjective and objective elements:

dishonesty requires knowledge by the defendant that what he was doing would be regarded as dishonest by honest people, although he should not escape a finding of dishonesty because he sets his own standards of honesty and does not regard as dishonest what he knows would offend the normally accepted standards of honest conduct.

and

The words “bad faith” suggest a mental state. Clearly when considering the question of whether an application to register is made in bad faith all the circumstances will be relevant. However the court must decide whether the knowledge of the applicant was such that his decision to apply for registration would be regarded as in bad faith by persons adopting proper standards.

Accordingly, her Honour considered:

164. Bad faith, in the context of s 62A, does not, in my opinion, require, although it includes, dishonesty or fraud. It is a wider notion, potentially applicable to diverse species of conduct.
165. The formulation in United Kingdom authority of bad faith as falling short of the standards of acceptable commercial behaviour observed by reasonable and experienced persons in a particular area is, in my view, an apt touchstone. An overly literal application may, however, tend to negate the relevance attributed to the applicant’s mental state in the combined test preferred in Harrison.
166. Further, in my view, mere negligence, incompetence or a lack of prudence to reasonable and experienced standards would not, in themselves, suffice, as the concept of bad faith imports conduct which, irrespective of the form it takes, is of an unscrupulous, underhand or unconscientious character.

Dodds-Streeton J rejected the proposition that it was enough that Fry knew of Sports Warehouse’s trade mark and usage.

While her Honour regarded Fry’s conduct as exploitative, the factor which saved it in the end was an exchange of correspondence between the parties. After Sports Warehouse learnt of Fry’s use and demanded it stop on the basis of its international trade mark, Mr Fry had challenged it to provide proof of the international trade mark. Sports Warehouse said it would do so the next day but, her Honour found, never did so. At [174]:

174. In circumstances where:

(a) Mr Fry unequivocally indicated his willingness to cease using TENNIS WAREHOUSE if Sports Warehouse provided evidence of its entitlement, and sought a prompt response, so that if necessary he could change the name prior to significant business development and expenditure on advertising;

(b) Mr Fry did not acknowledge Sports Warehouse’s ownership or rights in Australia and Kenny J did not find that Mr Fry did not believe his assertions about the implications of a business name search, although they were misconceived;

(c) Sports Warehouse, despite undertaking to do so, did not provide any documentation or evidence of its entitlement or rights to the “TENNIS WAREHOUSE” mark, the subsequent application to register which in Australia was unsuccessful. It failed to make any further contact or objection until Fry Consulting again initiated contact two years later; and

(d) During that period, in the absence of any further objection or contact from Sports Warehouse, Mr Fry proceeded to develop his business using the words “TENNIS WAREHOUSE”, to which he added the word “AUSTRALIA”, and subsequently commissioned Mr Hughes to design a tennis ball logo, resulting in a composite mark,

it was difficult to accept that Fry’s conduct fell short of what would be acceptable commercial behaviour (especially, one might add, where Fry did not lodge its application until 2 years after Sports Warehouse said it would provide its proofs the next day).

Fry Consulting Pty Ltd v Sports Warehouse Inc (No 2) [2012] FCA 81

Share on Facebook

If you want to understand how recorded music is licensed to the radio stations, this is a good place to start.

The broadcasting of recorded music over the “airways” by the commercial radio stations is covered by licence agreements with PPCA. When the radio stations broadcast recorded music as part of a “program”, the audio stream is split between the FM and DAB+ radio bands and a webcast service; that is, the audio stream is sent to 3 different distribution means.

In deciding what is comprehended within the broadcast right under the Copyright Act (see ss 85(1) and 10(1)), it is necessary to determine what is included in a “broadcast service” under the Broadcasting Services Act. The relevant Ministerial Determination under this legislation excluded from the definition of “broadcasting service”:

.. [any] service that makes available television programs or radio programs using the Internet

but then excepted from that:

… [any] service that delivers television programs or radio programs using the broadcast services bands.

Foster J considered this definition required him to focus on what was “the service” and not just the means of transmission:

130 The service which transmits the very same radio programs at essentially the same time both to the FM transmitters and beyond and to the web stream servers and beyond is the one service. On the facts before me, the members of CRA who stream their radio programs on the Internet do so only as part of a program package which also simultaneously transmits those programs via frequency modulated radio waves to the consumer’s FM receiver. In truth, the service is but one service being a service which combines various delivery methods or platforms and which delivers the same radio program using the broadcasting services band. It falls within the exception to the exclusion set out in the Ministerial Determination.

131 Therefore, in my view, the service provided by the members of CRA is a broadcasting service.

132 That being so, the simulcast transmission of the same radio program via the FM waves and the Internet is also a “broadcast” within the current definition of that term in s 10(1) of the Copyright Act and, for that reason, is within the scope of the licence which PPCA agreed to grant to the members of CRA and which it did grant from time to time to members of CRA upon the terms and conditions set out in the Member Agreement.

Phonographic Performance Company of Australia Ltd v Commercial Radio Australia Limited [2012] FCA 93

Share on Facebook

Prof. McKeough is Dean of the University of Technology Sydney and a well known IP luminary.

According to the Press Release:

“The Gillard Government is determined to get the balance right between providing incentives for creators and innovators and encouraging new opportunities within a digital economy including via the National Broadband Network.

“The inquiry will consider whether the exceptions in the Federal Copyright Act are adequate and appropriate in the fast paced digital environment,” Ms Roxon said.

Draft terms of reference are to be released soon, for consultation.

The ALRC has famously produced the excellent Designs report which led to the Designs Act 2003 and also a report into Gene Patenting. Hopefully, this inquiry will get the resources and the time to meet the high standard set by those efforts.

Lid dip: Peter A. Clarke

Share on Facebook

The pressures of time mean that I can only provide a very brief synopsis at this stage: however, his Honour has also published a very helpful Summary in what would probably be considered more user friendly language (and length).

To recap: Optus offered its 3G mobile (cellular) customers – well the personal and small and medium business ones – with a service in which they could choose to record a broadcast of a free to air (FTA) television broadcast. Once a customer chose a recording, Optus’ equipment recorded the FTA transmission (in 4 different formats: PC, Apple, Android and iOS) on Optus’ servers and the customer could then chose to replay the recording at a later time (within 30 days) by having it streamed to their computer, iOS or Android device. All customers got some storage (45 minutes) as part of their subscription, but could pay for more. (For Optus’ descriptions see here and here.)

Back in 2006, the law was amended to make it clear that time shifting (what used to be called home taping such as when people had VCRs) or format shifting of FTA broadcasts for personal use did not infringe copyright in the broadcast or any underlying works. See s. 111.

In finding that there was no infringement, Rares J had to deal with 7 issues. For present purposes, however, the key finding was that it did not make any difference whether or not the customer used their own equipment in their own “house” or the equipment was owned by someone else or located elsewhere.

When the legislation to amend s 111 was introduced it underwent some amendment of its own and Rares J noted that the further amendments were stated to be intended to:

“The bill adds new copyright exceptions that permit the recording or copying of copyright material for private and domestic use in some circumstances. This amendment makes it clear that private and domestic use can occur outside a person’s home as well as inside. The amendment ensures that it is clear that, for example, a person who under new section 109A copies music to an iPod can listen to that music in a public place or on public transport. (Rares J’s emphasis)

and

57 The Minister then explained in the Senate, repeating the words of the Further Supplementary Explanatory Memorandum, why cl 111(1) had been reworded saying (ibid):

“This relates to time shifting. … This amendment substitutes a new section 111(1), which removes the requirement that a recording of a broadcast under section 111 must be made in domestic premises. This amendment provides greater flexibility in the conditions that apply to time-shift recording. The development of digital technologies is likely to result in increasing use of personal consumer devices and other means which enable individuals to record television and radio broadcasts on or off domestic premises. The revised wording of section 111 by this amendment enables an individual to record broadcasts as well as view and listen to the recording outside their homes as well as inside for private and domestic use.” (Rares J’s emphasis)

Thus, it appeared Parliament did not intend to draw a distinction between equipment owned and operated by the viewer in his or her own premises. Accordingly, his Honour considered (at [63]):

… the user of the TV Now service makes each of the films in the four formats when he or she clicks on the “record” button on the TV Now electronic program guide. This is because the user is solely responsible for the creation of those films. He or she decides whether or not to make the films and only he or she has the means of being able to view them. If the user does not click “record”, no films will be brought into existence that he or she can play back later. The service that TV Now offers the user is substantively no different from a VCR or DVR. Of course, TV Now may offer the user a greater range of playback environments than the means provided by a VCR or DVR, although this can depend on the technologies available to the user.

Like the 2nd Circuit in Cartoon Network, his Honour considered (at [66]) that there was no real or sufficient distinction between the characterisation of a user of the service to record a FTA broadcast and someone who used a VCR or DVR to do so.

Rares J noted the careful contractual obligations imposed by Optus to ensure that users promised to use the service only for their own private or domestic purposes and, in recognition of the ordinary experience of life, was prepared to infer that was typically the purpose for which the service was used, even apparently in the case of small and business customers.

The other major issue for comment at present is who makes the communication when the customer pressed the “play” button. Rares J recognised that, in a sense, Optus made the communication as it was its servers which transmitted the stream to the customer. Having regard to the deeming provisions in s 22(6) and (6A), however, his Honour considered that the more correct characterisation was that it was the customer him or herself who made the communication. It was the individual customer who decided what was recorded and who also decided whether, when and to where it was transmitted. In reaching this conclusion, Rares J distinguished the situation in Roadshow where a Full Court had found that there could be a communication to the public by transmission of Bittorrent streams between computers without any human intervention. At [91], Rares J considered that the role of the customer of the TV Now service was very different from that of someone who just clicked on a link on a web page. His Honour commented at [95]:

It may appear odd that Optus, which has stored the films in its NAS computer, does not “communicate” (make available online or electronically transmit) the film in the compatible format, but that is because it did nothing to determine the content of that communication. The user initially chose to record the program so that later he or she could choose to play the film so recorded using the TV Now service. Optus’ service enables the user to make those choices and to give effect to them. But in doing so, Optus does not determine what the user decided to record when he or she later decides to play it on the compatible device he or she is then using to watch the film. Hence, the user, not Optus, is the person responsible for determining the content of the communication within the meaning of s 22(6) when he or she plays a film recorded for him or her on the TV Now service. Thus, the user did the act of electronically transmitting the film within the meaning of ss 86(c) and 87(c).

Needless to say, there are quite a few “other” points in Rares J’s 115 paragraphs:

Singtel Optus Pty Ltd v National Rugby League Investments Pty Ltd (No 2) [2012] FCA 34

For a more recent “no volitional act, therefore no infringement” case in the USA see Prof Goldman’s ‘Photobucket Qualifies for the 512(c) Safe Harbor (Again)–Wolk v. Kodak‘

There seems to have been a similar success in Singapore; but Rares J considered the TV Catch Up case in the UK less helpful as the legislation and type of usage in question was rather different. A question on communication to the public has been referred by the English court to the CJEU.

Lid dip: Copyright Council

Share on Facebook

Case 1 (Hew Griffiths aka ‘bandido’)

Case 2 (Richard O’Dwyer)

Meanwhile, some controversy is brewing because the FBI has seized the domain name and apparently blocked any access to the site even by those who have stored material legitimately in the service. Does that mean we all need to start worrying what will happen if our online back-up service is being used by alleged pirates too?

Share on Facebook

Well guess what, it has happened before albeit from this far away destination.

Mr Griffiths has apparently served his time (in both Australia and the USA) and had this to say to an enterprising journalist.

Lid dip: Graham Dent for the boing boing link!

Share on Facebook